How Should You Use Your Tax Refund?
We can’t tell you how to spend your money, but we can give you our best advice on how to use your tax refund this April. Though you may want to treat yourself to a vacation or a big purchase you normally wouldn’t be able to afford, we suggest taking a moment to assess all your options. As tax season comes to an end, New Era Debt Solutions wants to offer our tips and advice on the best places to use your tax refund.
Pay off credit card debt.
High interest rates make paying off credit cards difficult. Using your tax refund to pay off credit card debt can help make your monthly payments less burdensome, depending on the amount you receive. We suggest trying to contribute as much as you can afford toward your existing debt and to tackle the debt with the highest interest rate first. The last thing you should do is ignore your debt. Try to continue making payments on your credit card debt even after you use your tax refund. The best way to control your debt is to make payments on it.
Save, save, save!
Another smart way to use your tax refund is to bolster your savings account. Do you have savings for emergencies? Or a general savings account you’d like to contribute to for future purchases? Consider putting your tax refund away to enjoy the benefits later. Think about saving for that down payment on a car or house. The benefits of saving your tax refund now will be worth it in the end. You can also split your refund by putting half towards credit card debt and half towards savings. The choice is yours!
When you are in debt, investing may seem too risky. With more risk comes more reward, though this statement does not always hold true. Investing your tax return does not mean you have to choose the highest risk stocks, ETFs, etc. The goal of investing your tax refund is to put money away so you can have more saved for later. There are several factors that can influence your saving and earning potential. You can speak with a tax professional to determine how your dollars will best be invested.
Make sure you’re covered.
Tax season could be the opportunity to take a second look at your spending plan and coverage needs. Can you afford to add more coverage to your insurance plans or possibly buy a new one? For instance, do you need earthquake, flood, or any sort of natural disaster coverage? You may be able to buy a policy or additional coverage and still be able to use the remainder of your tax refund elsewhere.
New Era Debt Solutions has settled over $200 million in debt. We want you to be our next success story. Call one of our friendly counselors today for a free consultation to determine the best debt reduction option that fits your needs and budget.